Energy Laws in UK May Increase Company Bills By 20% In 2020, Says Energy Secretary

By Cynthia Taylor

Power and gas bills for the heaviest corporate customers could increase by about 20% by the year 2020 as government’s promotion of curbing pollution emissions says Chris Huhne, Energy Secretary.

The government’s efforts to boosting renewable energy and putting a price on carbon will increase the biggest user’s energy bills, parliament was told by Mr. Huhne. Projected charges, depending on the company’s energy mix, are expected to rise by £20.9m which is up from £17.5m, according to DECC’s document released from Mr. Huhne’s department.

Mr. Huhne said that it was important that these companies and industries play their part in the transition to an economy that is low-carbon, however in this annual energy statement, that was delivered to lawmakers, London, he said that it is also very important that they will remain competitive,

Mr.Huhne has been tasked with making sure that Britain will meet the domestic goal of making sure that greenhouse-gas output is cut in half by the year 2027, as well as deriving 15% of energy from renewables by the year 2020 to meet European Union’s target.

According to Ofgem utility companies need to spend around £200 billion to replace aging power plant and the upgrading of the electricity grid by the year 2020.

Two of the country’s highest energy intensive companies are Tata Steel Limited and the Ineos Group Holdings Plc chemicals manufacturer. In June the Confederation of British Industries said that these two manufacturers may prove to be uneconomical after the year 2013 because of the planned carbon-dioxide taxes of £4.94 per metric ton of CO2 which has been dubbed a ‘floor price’.

The analysis that was released today has reinforced the urgent need to see that measured needed to safeguard investment in Britain’s energy intensive industries, as well as safeguard jobs in the industry.

Lobby group for manufacturers, EEF’s Policy Director, Steve Radley, says that the government needs a firmer grip on costs of energy that is directly under its control – costs related from its own policies.

George Osborne, Chancellor of the Exchequer, is to put measures in place by the end of the year, which is to lessen the effect on the industry of the climate protection efforts. Greg Barker, Energy Minister, said in an interview today that the country is taking lessons from German’s approach.

This past year Germany decided that it would shut down its nuclear reactors by the year 2022, and has plans to replace the nuclear plants with renewable capacity as well as gas-fired and coal power stations.

Mr. Barker said that ambitious plans to de-carbonize the UK economy at the same time to see that the UK is at the forefront of renewables, however, de-carbonization should not mean it become de-industrialization.

Annual bills for the largest user could range from £9.3m to £17.4m in 2020 without UK’s new energy policies, this is according to government and that policy measures push the projection to £9.4m up to £20.9m.

Mr. Huhne says that medium sized businesses will fact have a 19% increase in their bills, this according to the study, and that household bills will be below previous projected levels. That will soften the blow of increasing heating and electricity costs.

The previous estimates had shown an expected 10% gain on typical household bills for electricity and gas up to £1,379 in 2020. Government measures that were introduced promoting renewable power, insulation of homes, more energy efficient appliances to be manufactured and cleaner fossil fuel plants will affect the increases by lowering them by about 3%.

All the policies, which have added £20 this year to household bills, will cut a net £90 from projected amounts in 2020 said the government.

The renewables obligations certificate system that compels the utility companies to purchase from the large scale wind farms, wave and tidal energy projects and the biomass plants, will add £40 to household bills in2020. Feed in tariffs and the premium rates that are paid for clean energy from small project will add £6 to house bills according to government, and the support that is given to the poorer homes will add £75 to the average bills.

Policies of the European Union which are aimed to making electrical appliance light bulbs to be more energy efficient will cut £158 off the bills. Mr. Huhne;s “Green Deal” and Smart Meters will cut £37. Smart Meters transmit information of live readouts of energy to the utilities, thus, providing a more accurate billing system and also allow user to be able to monitor their energy usage.

The Government’s project of the ‘Green Deal” allows households to pay for home improvements, such as insulation of homes; through the savings that householders generate on their energy bills. This “Green Deal” will support 65,000 insulations and also constructions jobs by 2015 said Mr. Huhne, and the programme could expand to 250,000 jobs in 2030 from 26,000 at the present time.